Shah Commission Report on Illegal Mining

The Shah Commission is a high power panel set up by the Union Ministry of Mines in 2010 to look into the illegal mining of iron ore and manganese in the country. The commission’s report is in 5 voluminous parts and was first submitted in October 2013. This report has revealed a sort of scam in Odisha and the government remained sitting over it for six months. But there is a law which says that the government is obliged to table the report along with a memorandum of action taken in the parliament within six months. The report was brought before the Union Cabinet on January 2, 2014. As per rules, the government is required to prepare an Action Taken Report (ATR), so that both the commission’s report as well as ATR can be laid before the parliament. The ATR is to be drafted by the Committee of Secretaries (CoS). Thus, the report is now with CoS. Government had marked the report as ‘secret’ and decided not to put it in public domain until it was tabled in Parliament. Thus, the report is not in public domain and whatever has been published in media is summarized here:

• Illegal mining of Iron and Manganese ores in Odisha caused a loss of Rs 59,203 crore to state’s exchequer and the state government should recover this money as soon as possible. The recovered amount should be used for the development of two districts, Keonjhar and Sundergarh. These are the two districts badly affected by illegal excess mining
• The future mining leases should be granted via only the auction route. This also includes the mines where leases are not renewed and are operating under the deemed extension route.
• In Odisha, all modes of illegal mining is being carried out. The law has been made helpless because of its systematic non-implementation. There is a large scale violation of environment and forest laws, rules and notifications.
• Majority of the lease holders violated the Environment Impact Assessment Notification and operated without Environment clearances.
• The commission also traced freight evasion, false excise certificates and recommended that Railways should ask CBI to investigate it.
• The commission has said that it came across one of the biggest illegal mining ever of Rs. 2000 Crore in the Uliburu Reserve and Revenue Forests. The commission recommended that the case be handed over to the CBI for further inquiry.

Comment on Implications

We see that the report has indicted both the central and state governments for systematic illegal mining worth thousands of crores in Odisha. It finds out that at least 70 top companies, including Steel Authority of India Limited, Tata Steel, Odhisa Mining Corporation and Essel Steel of Aditya Birla Group, were involved in extraction of iron and manganese ore from the state just by violating environment laws. Of the 192 mining leases, 176 were within dense forests and 94 were operating without environment clearances. Just as in Goa, more than 90 mining leases were operating under “deemed extensions”. The scam has been going on since 1994-95 in connivance with politicians, bureaucrats and railway officials, stated the Shah Commission and called for a CBI inquiry into illegal mining in Odisha.

It’s worth note that Odisha contributes 45-50 per cent of India’s iron ore production. The report although exposes a kind of scam, yet adopting its recommendations would cripple the steel industry. The report poses a problem for scam hit UPA government because any disruption in supply could potentially lead to plant shutdowns in the domestic steel industry or heavy reliance on iron ore imports.